Why Intel Stock Was Slipping Today
Shares of Intel fell 3.2% after news it will be removed from the Dow Jones Industrial Average, replaced by Nvidia. This marks the end of Intel's 25-year presence in the Dow, reflecting its declining relevance in the chip sector. Although the removal won't significantly impact Intel's business, it may lead to ETF sell-offs. Despite a 6% revenue drop in Q3, investors are optimistic about fourth-quarter guidance, anticipating a revenue increase and a return to profit as Intel continues its restructuring efforts.
Shares of Intel (INTC -4.39%) were falling today in response to news after hours on Friday that it would be removed from the Dow Jones Industrial Average and replaced by rival Nvidia.
The news was anticipated after Nvidia split its stock in June, but it nonetheless marks the end of an era for Intel, which has been part of the Dow for 25 years.
As of 11:16 a.m. ET, shares of Intel were down 3.2% on the news.
Image source: Getty Images.
Intel's retreat continues
Intel's removal from the Dow doesn't really impact the business, but it will lead exchange-traded funds (ETFs) that track the Dow to sell the stock when the Dow makes the switch on Nov. 8. That's not as significant as being removed from the S&P 500 since not as many ETFs follow the Dow, but it still leads to greater supply and less demand.
Additionally, the Dow's dropping Intel signals the company's waning relevancy in the chip sector, which Intel once dominated. Nvidia passed the company in market cap in 2020 and is now more than 30 times more valuable than Intel, showing how quickly the fortunes of the two companies have changed.
What's next for Intel
Intel just reported third-quarter earnings, and investors generally liked what they saw in the quarter as the stock rose in spite of weak results.
Overall revenue fell 6% to $13.3 billion, and it reported an adjusted loss of $0.46 per share, compared to a per-share profit of $0.41. One-time impairment charges contributed to some of that shortfall.
However, investors were encouraged by fourth-quarter guidance calling for a sequential increase in revenue, and a return to an adjusted profit.
Three months after Intel announced a massive restructuring, the stock still has a lot to prove, but shares have fallen far enough that there's a significant upside if the company can execute on its rebuilding plan.